United States
According to The New York Times usage rates tripled among American middle and high school students from 2013 to 2014, and the product is now more popular with the demographic than traditional cigarettes.
Thirteen percent of high school students nationwide use the vaporized cigarette substitute, according to recently released data from the Centers for Disease Control and Prevention. Some teenagers say they are vaping, the term for using e-cigarettes, as a way to quit smoking, while others had never taken a puff before and are simply jumping on a trend seen as cool.
The development has accompanied an accelerated decline in the use of cigarettes among teens, but health officials don’t seem to notice this victory over tobacco.
The appeal of e-cigarettes seems to be both their perceived advantages over smoking, such as fewer health risks and a lack of offensive odor, and the wide variety of flavors and devices that allows users to customize the habit to their own tastes. Vapers can choose from a range of sweet, candy-like flavors, such as berry menthol or one called Unicorn Puke, said to resemble a mix of Skittles.
As the success of upstarts such as Lost Art Liquids, the makers of Unicorn Puke, shows, the industry is still highly fragmented, and the future of e-cigarettes may lie with small startups rather than large companies. An estimated 60% of vapor sales occur through untracked channels, and the vast majority of competitors are still small niche brands.
The next few years should bring further consolidation to the industry, however, particularly as Food and Drug Administration regulations are also likely to create barriers to new entrants and promote consolidation. Large companies with big budgets will probably be the winner in this market over the long run. While it is unclear at this point which stocks are best positioned, the e-cigarette market represents a rare growth opportunity for tobacco investors who are already happily reaping healthy dividend payouts